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Yes, that is how it works. Basically you would use it to take someone out that is in good cover that you cannot hit. It's meant to speed up the game. If you are the 'sniper' you give the card to a Ref and tell him which player you want out.

You are not alone in thinking that. You can find it heavily debated in the forums and on the Living Legends facebook. It is a role play element. On the practical side it is used to speed games along in certain conditions and to over both the range and accuracy of paintballs at distances. Plus, from a scenario stand point it gives teams a new resource to fight over, a new role for a player, and another strategy element for commanders to use.